Alternative fuels

Difference Engine: Competition at the pump

YOU would be forgiven for thinking a stake had been driven through the heart of the ethanol lobby in Washington, DC. The contentious tax credit it used to get, which put $6 billion a year of taxpayers’ money into the pockets of wealthy agri-business concerns, expired on January 1st with barely a whimper. Faced with demands for an end to the subsidy from critics on both the left and the right of the political divide, bio-refiners who use maize as their feedstock seemed simply to have accepted their fate. In fact, nothing could be further from the truth.

The reality is that, despite this summer’s scorching temperatures and record drought, America's maize farmers are doing just fine. Their corn is currently selling for around $8 a bushel—four times its price in 2005, and up over 30% since June. The handouts had become virtually irrelevant anyway, thanks to a mandatory requirement that demands an increasing amount of corn-based ethanol be used to dilute petrol sold at the pump.

The petrol Americans put in their cars nowadays contains up to 10% ethanol (E10). In the Mid-West, where many of the bio-refineries are located, a blend containing 85% ethanol (E85) is also available for so-called “flex-fuel” vehicles. Lately, the Environmental Protection Agency (EPA) has approved a blend with 15% ethanol (E15) for use in ordinary petrol-powered vehicles built from 2001 onwards.

For all this and more, ethanol producers can thank the Energy Policy Act of 2005, which established a controversial mandate known as the Renewable Fuel Standard. Originally, the RFS programme required that 7.5 billion gallons (28 billion litres) of renewable fuel (ie, corn-based ethanol) be blended annually into petrol by 2012, to help reduce greenhouse-gas emissions, cut oil imports and keep the farm lobby in clover.

Following the Energy Independence and Security Act of 2007, the mandated schedule was upped to 13.2 billion gallons of corn-based ethanol annually by 2012, rising to an unprecedented 36 billion gallons by 2022. Today, around 40% of America’s field corn goes to making ethanol for blending purposes.

But consider this: if 36 billion gallons of ethanol are to be produced from corn, America will be diverting all its current field-corn capacity to ethanol production by 2022. To meet the needs for just domestic animal feed, as well as ethanol production, farmers will then have to devote additional acreage normally reserved for food crops to growing yet more field corn. Whether mandated or not, market forces will impel them to do so.

The world has already witnessed the negative knock-on effects of America’s food-to-fuel mandate. The United States accounts for 60% of the maize exported globally. Apart from providing feed for cattle, pigs and chickens, corn flour is a staple for millions of people in poorer parts of the world. With agricultural-commodity prices everywhere on the rise again (corn futures are up 50% since early July), the bread riots of several years ago are threatening to return. And so the law of unintended consequences wreaks its merciless havoc.

Today's situation is a far cry from ethanol’s original role as a mere additive for boosting petrol’s octane rating. After tetra-ethyl lead was banned from petrol for health reasons in the 1990s, the octane-boosting additive of choice was methyl tertiary-butyl ether. But MBTE was later found to have its own problems (it contaminated drinking water supplies), and was replaced with ethanol. Since then, ethanol has been added to petrol in increasing quantities—not for health, environmental or performance reasons, but solely to fulfill the mandated requirements set by the politically charged RFS programme.

While the ethanol added to petrol helps the air-fuel mixture in the engine burn smoothly rather than explode prematurely (ie, “knock") when under heavy load, it does not give the fuel more punch. In fact, the consensus is that motorists get 5-10% fewer miles to the gallon from petrol containing 10% ethanol (E10) compared with pure petrol. They do 25-30% worse when switching from E10 to E85.

That is only to be expected. A gallon of ethanol contains 67% the energy stored in a gallon of regular-grade petrol. Any blend is therefore bound to deliver inferior fuel economy. Motorists with flex-fuel vehicles reckon they have to fill up nearly twice as often when using E85 as opposed to E10.

The hassle aside, is it worth it? To simplify matters, take the present average rack price (ie, the price refineries charge their customers) for a gallon of ethanol ($2.13) versus a gallon of regular petrol ($2.84). Thus, the ethanol delivers 67% of the energy for 75% of the price. Answer: stick with petrol.

The ethanol lobby plays up the fact that ethanol produces fewer harmful emissions of carbon monoxide, nitrogen oxides and particulate matter than either petrol or diesel. That is all true. But what is rarely mentioned is that, when burned in a car engine, ethanol produces significantly larger quantities of formaldehyde and related compounds such as acetaldehyde.

The United States government has declared formaldehyde a carcinogen, and lists acetaldehyde as a probable carcinogen. Such compounds are also adept at triggering photochemical reactions. As such, they generate greater amounts of ground-level ozone. Overall, an ethanol exhaust produces over twice as much ozone as a petrol engine’s. That means more smog. So much so that the California Air Resources Board—ever concerned about the millions of vehicles in the Los Angeles basin, with its pollution-trapping inversion layer—has set special emission standards for formaldehyde and its relatives alongside those for nitrogen oxides and other pollutants.

To get matters in proportion, aldehydes in general, and acetaldehyde in particular, may be pretty nasty pollutants, but they are not as bad as some of the original emissions found in petrol exhausts. Carmakers have done an impressive job over the decades cleaning those up. They will presumably do the same for ethanol's remaining emissions.

Meanwhile, much remains to be done on weaning America off corn-based ethanol. Like Brazil's, the United States' ethanol policy remains tilted exclusively towards renewable sources. For political reasons, this nowadays means corn, but eventually that will change. Ethanol is currently being made in non-commercial quantities from cellulosic materials (eg, corn husks, wood pulp and even switchgrass) that do not compete with food or feed crops. Whether these demonstration processes can be scaled up to produce ethanol commercially for $2 a gallon or less is an open question.

What is not in doubt is that ethanol can be made from fossil fuels—including natural gas, coal and petcoke (the coke residue from cracking oil)—for a good deal less than the cost of producing it from corn. Celanese, a chemical company based in Dallas, has a “game-changing” acetyl technology called TCX that can convert natural gas, coal or petcoke into ethanol for $1.50 a gallon—equivalent, the company says, to making petrol from crude costing no more than $60 a barrel.

The advantage of processes like TCX that use non-renewable feedstocks is that they do not strain the food supply. Nor are they affected by the weather or crop yields. Celanese is currently building one such ethanol plant, in China, and plans another in Texas. With America’s super-abundance of cheap natural gas, ethanol from a TCX plant would seem an ideal candidate for the forecourt. But without a change in the law, that is never going to happen.

Things would alter dramatically, though, if a couple of bills moving through Congress actually make it onto the statute book. One is the Open Fuels Standard Act, introduced in May 2011, which is stuck in committee. If passed, this would require flex-fuel vehicles capable of running on any combination of petrol, ethanol or methanol to account for 95% of each manufacturer’s fleet by 2017. The cost of adapting a petrol-powered vehicle to run on these other fuels is nowadays marginal (less than $100) when the modifications are incorporated on the assembly line. Motor manufacturers have long since replaced all the natural rubber seals and cork parts in fuel systems that ethanol used to attack.

The second bill, the Domestic Alternative Fuels Act, was introduced in January 2012. This would allow ethanol produced from any domestic hydrocarbon, other than petroleum, to satisfy the RFS mandate. In other words, ethanol made from natural gas could be used to fill the quota that is satisfied today solely by corn-based ethanol. The farmers and their agri-business partners hate the very idea. Though it has bipartisan support, the bill’s chances of becoming law would therefore seem slim.

Letting motor fuels compete at the pump is the obvious way to go. But even if both bills were enacted, such competition would be available only to the 13m or so new vehicles that join the American fleet each year. Left out of the equation, notes Joseph Cannon, chief executive of the Fuel Freedom Foundation, a campaign group based in Irvine, California, are the 250m petrol-powered vehicles that are on American roads today. For there to be real competition at the pump, these cars and light trucks also need to be given the option to use the most competitive fuel available.

As the EPA’s regulations stand, it is illegal to convert existing petrol-driven cars to run on ethanol or methanol, or even battery power. Doing so invalidates their emissions certificates. Tesla Motors, an electric-car company based in Palo Alto, California, was fined $275,000 by the EPA because the emissions certificate of the vehicle its battery-powered roadster was based on (a featherweight Lotus Elise from Britain) had been invalidated by removing the source of those emissions and using a pollution-free electric drive instead.

But what if the EPA'S rigid cerification rules were relaxed in a way that allowed the engines in existing vehicles to be made less polluting? The result, Mr Cannon believes, would be a surge in kits for converting cars and trucks that are already on the road to flex-fuel vehicles—which would then be free to use the most competitive fuel of the day.

As for the cost of conversion, a couple of years of innovation would probably beat the price of after-market kits down to a $100 or so. At a stroke, the EPA would then have succeeded, beyond its wildest dreams, in reducing overall vehicle emissions, cutting the cost of motoring, and replacing much of America's imported oil with at least home-grown, if not home-brewed, alternatives.

How are car batteries recycled? Is that a clean operation? Also, the charging station problem is a serious barrier to entry.

There's a lot of innovation going on in the alternative fuel arena. Which one wins out is anybody's guess. Unfortunately while oil is being subsidized, the cost of evening the playing field is just costing taxpayers more. Slowly end the subsidies and all of them can go. Unfortunately this will hurt the portion of GDP dependent on cheap fuel, so it has to be slow and gradual.

Finally, the law is undeniably filled with unintended consequences. Some sort of review and adjust procedure should be included in these kinds of policies from the get-go. But, I guess the farm lobbyists knew what they were doing.

people who live in grass houses shouldn't throw scones (intentional malaprop:)
ethanol is railed to the end-use markets not pipelined. some truck in local markets but mostly rail.
its then trucked to the distribution terminal (1 step before the service station).
also, the gasoline marketing companies have to add storage and blending and testing at the terminals to blend the ethanol with the RBOB so its not really "drop in".
the service stations also need to be "dewatered" before hand otherwise you wind up getting phase separation.

I won't embarass my company by replying with my full name, but let's go ahead an look at a few things you've said.

Pipeline transportation of ethanol may have only started recently in the US but there have been "batch" shipments to Ihla d'Agua, RJ in Brazil for some time now that have cycled ethanol cargoes with other refined products, I suggest you look them up.

Blaming the construction of greenfield sites due to the phaseout of MTBE on corn ethanol is an exercise in misdirection. Ethanol may have been the "only viable oxygenate substitute" but that would be the case regardless of the mandate. It may have been possible, though unlikely, that without the ethanol mandate we would still see direct hydration of ethylene going on to provide oxygenate. Either way, the very same Chemical Engineering article noted that the main driving forces were MTBE phase-out and demand for new alky options, not the adoption of corn ethanol.

My level of experience may be lower than your own, but something tells me that you're a bit out of touch with the current state of refining. I, too, have some credentials but don't feel the need to brag about them. At some point we may cross paths at a conference, and in fact may already have at the recent AFPM one. I'll be sure to not attend your talks.

Too bad they didn't build the North American Water and Power Alliance before the environmentalists took over the USA. North America could feed half the world and fuel the auto industry with ethanol from crops.

I learned about the edibility in Scouting, processing the roots for a starchy flour. The lower parts of the leaf stock also contain a sugar juice that can be reduced.

The sugars are no different to use than grains or grasses (corn, wheat, etc.) and contain more potential for sugar conversion than corn. The starch components can be cooked, like a beer malt or corn mash, to convert to sugar before being fermented. That product is distilled into ethanol in a conventional process.

It all falls under the heading of cellulosic bio-fuel production, $5 college word for a simple process most country folk are familiar with; moonshining.

I picked up an excellent compendium on that covers the full spectrum of sources, production and applications that gets into the specifics; "Alcohol Can Be A Gas", David Blume available at www.permaculture.com.

The statement "if 36 billion gallons of ethanol are to be produced from corn" is misleading. The RFS2 limits the amount of corn-based ethanol that can meet the mandate at 15 bgy. The remaining 21 bgy must come from other renewable fuels (e.g., cellulosic biofuels, biodiesel, etc.)

Interesting about the cattail. 1075 gallons of ethanol per acre you say? using what process? cattail also has several edible parts. Ethanol comes primarily from the fermentation of sugars..so cattails have lots of sugars? some sugars are harder to utilize than others.

Let's have some deeper honesty about carbon and EROEI - energy return on energy invested. Corn ethanol is the output of agricultural practices that require huge govt. subsidies, and subsidies in the form of natural-gas-derived fertilizers. Why? Because the topsoil has become deficient in fertility, and is itself a crucial carbon sink that is being mined at 10,000 times the rate that topsoil is naturally produced. It doesn't take a genius to see where this boondoggle is heading.

The Economist article on August 20th titled, “Difference Engine: Competition at the Pump” included a critical factual error that undermines the entire premises of the article. The article made the assumption that all U.S corn would eventually go into ethanol use once the 36 billion gallon target under the Renewable Fuels Standard was reached. The United States Renewable Fuels Standard caps corn ethanol at 15 billion gallons with the remainder set to come from next generation ethanol that does not use corn as a feedstock. These kinds of factual errors are fueling the misguided attempts to repeal the Renewable Fuels Standard because of an unusually bad drought in the United States this year.
Globally, total grain output is expected to drop by 2.9% this year, but even in this mediocre growing season, global production is still expected to be the second largest in history with grain stocks ending 4% above the 10 year average. It is also worth noting that the U.S. ethanol industry will use only 2.9% (net) of the world grain supply. In short, any calls to abandon the RFS or biofuels in the United States based on one growing season are unfounded.
According to a Cardno Entrix 2012 report titled, “Contribution of Biofuels to the Global Economy”, the global biofuels industry is a bright spot in the current world economy, contributing $277.3 billion to the global economy and supporting nearly 1.4 million jobs in all sectors in 2010. The global biofuel industry continues to grow year after year while reducing our reliance on crude oil. These short sighted reactionary calls to end biofuels mandates would not only have an immediate negative global economic impact but it will hurt the next generation of biofuel development which will impact the global economy for years to come.

Simple points, justification above:
- The US corn crop is still on track to be in the top 10 in history
- Land use change from corn ethanol within the US has been minimal, instead farmers in the US up their yields in response to higher prices
- Ethanol doesn't compete directly with food, it competes with animal feed, which hasn't really been in shortage, see this analysis
- Ethanol pricing is bad now because corn is expensive, the pricing story is more complicated
- Putting a natural gas-to-liquid ethanol into the renewable fuels standard makes a mockery of the "renewable" part and the goal of reducing GHG emissions
- Gas-to-liquid systems like Celanese's have an even poorer energy balance than corn ethanol

Ethanol is a chemical, with a fixed chemical formula. Ethanol from Brazil therefore cannot have a "high energy efficience" compared to US ethanol - unless you are talking about the energy required to *produce* the ethanol.

Also, if ethanol has only 67% as much energy as gasoline, there are only two ways that a flex-fuel engine can have more power when burning ethanol - burn a lot more of it, or burn it much more efficiently. I'm sceptical of the second claim, and as far as the first, you can fix that by changing the engine's fuel settings when burning gasoline.

Both subsidies and tariffs ended on December 31, 2011. But now the Brazilian ethanol industry is in crisis, and last year they had to import ethanol from the US, and the government dropped the ethanol blend from 25% to 20% to mitigate the shortage in ethanol supply. Due to its current high prices, Brazilian flex-fuel owners are not filling with pure ethanol as they used to just three years ago. This crisis began in 2008 as an effect of the world's financial crisis and high sugar prices in the world markets (sugarcane was diverted from producing ethanol to sugar, just the reverse problem the US has with the drought).

I know about thorium fission reactors. And everybody in the nuclear industry also know. These are much safer than uranium fission reactors. The US after wold war 2 chose not to use thorium because it did not produce plutonium as a by-product, which is used to produce atomic bombs. Thorium reactors are still non-viable profit wise. However, China and India are beginning to plan building thorium reactors soon.

The idea that using Ethanol to decrease emissions is ludicrous. The energy required to grow, ferment, and distil corn is not taken into consideration when looking at the emissions of the product. Yes the ethanol may burn cleaner in the car, but how much co2 was generated creating the ethanol.

I liked the point that E85 fuel sold in the midwest requires almost x2 as many fuel-ups as compared to the pure stuff. So if ethanol burns cleaner but we need to burn twice as much, the end results cannot mean less emissions.

We should be investing in nuclear-powered plutonium cars. Fill it up once and run it for 20 years.

A flex engine working with ethanol burns more fuel, but we are talkin about a engine made to work with two fuels. Ethanol burns to a higher pressure, so in a ethanol made engine, you can get higher compression ratio, and more power with the same quantity of fuel.

Until rechargeable batteries acquire sufficient energy density, the technology we need in cars are engines that generate power from heat (e.g. thermogenerators or Stirling engines) - then we could power our cars with ANY fuel - the ultimate flex-fuel system.

The problem is that the petrol/diesel infrastructure has made us inflexible about which fuels to use (though there are lots of people making their own diesel fuel from used cooking oil - which again normally requires some engine modification - and diesel fuel can also be made from coal).

Powering automobiles with plutonium is ridiculous. But a thorium powered economy producing sufficient electricity solves virtually every problem our energy craving world has. But then nobody knows about thorium fission reactors. Big oil, coal and uranium will see to it that it never happens. Pity.